NEW ROCHELLE, NY -- Just weeks after the New Rochelle City Council voted to give itself a raise, the City administration is proposing to bust the tax levy cap with a a major tax increase to fund a $150,000,000 10 year capital budget.

City Manager Charles B. Strome released the Fiscal Year 2017 proposed budget for the City of New Rochelle this morning at a press conference at City Hall. The budget of $202,194,704 includes a major investment in capital infrastructure based on a 10 year capital budget of $150,000,000.

Because the proposed budget exceeds the tax cap, the budget will require support of a super-majority on City Council.

Asked to respond to anticipated criticism that residents are facing a massive tax increase just weeks after Mayor Noam Bramson pushed through a retroactive salary increase for City Council members, Strome said he had no control over City Council increasing their own salary. He said the proposed tax increase in this year’s budget included a one-time hit needed to respond to City Council’s desire to address years of deferred investment in infrastructure. He noted that the increase above the tax cap represents a 1% increase of the average household property tax bill (two-thirds of property taxes in New Rochelle are based on school taxes, the remainder split between the City and County). Strome pointed out the total cost of the salary increases in 2017 is $39,000.

The Council concluded that an investment need be made in order to both maintain existing infrastructure and accommodate the proposed growth of the City and directed the administration to develop a ten-year capital plan to strategically fund this investment. The plan will be funded through development fees, grants, partnerships, use of fund balance, bond issuance and a one-time tax increase of 5.48% equal to 1% of the average household tax bill. The ten-year capital strategy addresses the need to accommodate the City’s demographic and economic growth while maintaining the existing infrastructure, and improving the quality of life for residents.

“The City is poised to become a much sought after place to live and work and an investment by all residents, both current and future will reap a vibrant City,” said Strome. “This proposed budget, prepared in a prudent and conservative manner, is a step towards achieving that goal.”

At a press conference on Thussday, Strome said it was the first time since he became City Manager that the City has had a 10-Year Capital Plan.

The proposed 10-Year Capital Budget includes $30 million for the new City Yard, $10 million for the renovation of fire houses, improvements to parks, sidewalks and more. It also includes $5 million for a comprehensive sewer study.

“The sewer system is 100 years old and in danger of collapsing,” said Strome of the study, due to be completed in the second half of 2017.

Strome noted that the budget proposes the maintenance and enhancement of basic City services within the allowable tax cap. This budget includes funding to not only restore twelve positions that were eliminated as a result of cuts in prior year’s budgets, but also includes funding for additional sidewalk cleaning, pothole repairs and contractual obligations.

The budget would restore five Police positions (two officers at the Intermodal Transportation Center funded through the Railroad Fund and three patrolmen City-Wide), increase funding for overtime for firefighters and add two new fire engines (one each at Fire Station 1 and 4), restore three sanitation positions, a new Junior Engineering Technician position for capital projects, a new new shared working supervisor with the Parks & Recreation Department

The budget would continue the EPA-mandated Illicit Discharge Detection and Elimination Program, discontinue commercial garbage collection services and add sidewalk cleaning services in heavily trafficked areas of the City and provide for additional pothole repairs

The City and Uniformed Firefighters Association Local 273 have initiated a study of the proposed development on the provision of fire services that will be completed in FY 2017.

In the area of Economic Development the budget would fund implementation of the downtown plan and the local waterfront plan by adding a new building plans examiner position to expedite plan reviews for residents and a new Senior Customer Representative in the Buildings Bureau to process permit applications.

The budget proposes the creation of franchising and advertising opportunities in the park system, an expansion of on-line web registrations for activity programs, passes and events, a system upgrade of the Permit and Code Enforcement process, completion of the installation of wireless capabilities throughout City Hall, City-wide document archive scanning capabilities to departmental applications and the implementation of a new service request system intended to increase response times and repairs.

“The fund balance has grown so that it can now be used for one-time capital projects as outlined in the ten-year capital plan,” said Strome. “For the first time, the City has reviewed all of the capital needs in each and every department and has strategically prioritized them as outlined in the ten-year plan provided herein.”

The City intends to invest $149.9 million in capital projects over the next ten years City-wide. The plan includes improvements in Community Services and Public Facilities, Economic Growth and Business Development, Neighborhood Resiliency, Parks and Natural Resources, Streets and Sidewalks and Vehicle and Equipment Projects. The ten-year capital program will be funded with long-term borrowing; grants and other special funds; fund balance and the proposed one-time tax increase. Debt service for these new projects will commence in FY 2017 and has been incorporated into the budget proposal.

“This is the sort of investment residents have been calling for over the past several years years,” said Strome. “It allows us to do the things people have asked us to do.”

Major projects included in the FY 2017 Capital Plan:

City-wide street surfacing program

Relocation of the Department of Public Works facility

Fire Station upgrades

Replacement of non-functioning or inefficient heavy duty trucks and equipment in the Public Works, Fire and Police Departments

Replacement of North Avenue Bridge in coordination with New York State including pedestrian friendly enhancements.

Security cameras at several locations City-wide

Replacement of the Main & Huguenot Traffic Signals that will be funded through a federal grant with a City share requirement

Sanitary Sewers Evaluation Study

On street muni parking meters

Also inluded is $50,000 for a roof at the New Rochelle Armory and funds in partnership with the City School District of New Rochelle to install a turf field at Columbus Elementary School.

The budget is prepared under the restrictions of the New York State tax cap legislation which restricts the increase in the property tax levy to no more than 2% or the rate of inflation, whichever is less. The calculation does not allow for the inclusion of property assessments that are eligible for PILOT programs.

“It is impossible for the City to implement the aggressive development plan and add services for residents under the constraints of the tax cap restrictions,” said Strome.

The FY 2017 tax cap rate for the City of New Rochelle is higher than in the past five years as a result of two commercial properties that have agreements for Payment In Lieu of Taxes (PILOTS) that will expire in FY 2016, most notably New Roc City. The assessed values of these properties have been added to the tax roll and have increased the tax cap rate for FY 2017. It is anticipated that as a result of new developments that will be eligible for PILOTS, future year tax caps will be well under 1%.

The FY 2017 total proposed tax rate increase of 7.36% is equivalent to an increase of approximately $248 per year to the average homeowner. This is expected to produce an additional property tax revenues of $4,114,619 over the amount levied in 2016. Funds generated through the tax cap of 1.88% or $63 per average household will be used to enhance services. The balance of 5.48% or $185 per average household will be utilized to fund the comprehensive ten-year capital plan that will support development in the City. This will be a one-time tax increase and funds generated each year will be utilized for the capital plan over the next decade. As the City is in the beginning stages of redevelopment, Strome anticipates that the future increase in both the commercial and residential tax base will fund the growth in the tax levy over the next few years to sustain the operating budget.

The City’s General Fund revenue of $68,955,542 has grown by 6.6% from the prior fiscal year as a result of an improving economy and anticipated one-time revenue streams. This revenue alone cannot fund all of the needs of the City.

Sales tax is the City’s second largest source of revenue and is expected to increase by $500,000, or 1.8%, in FY 2016 over the prior year. For FY 2017, we are projecting another modest increase of $500,000 or 1.88 increase over the estimated FY 2016 amount.

Other revenues are on the rise. The 2017 Budget anticipates an increase of $2.8m in building permits, planning board fees and other related fees as a result of the new developments that are planned in the City’s downtown area.

The City’s General Fund expenditures of $131,043,758 have grown by 8.5% from Fiscal Year 2016. This is primarily a result of right-sizing the workforce, contractual increases and the proposed growth in the ten-year Capital Plan. In 2017, the City will focus on increasing operational efficiencies.

Salaries and wages, exclusive of associated fringe benefits, comprises almost one-half of the City budget. Over the past three years, the City has entered into long-term employment agreements with most of our major bargaining units, providing budgetary certainty for the next several years. This budget provides funding to cover these contractual obligations in addition to the eleven restored positions and overtime funding outlined above.

Health insurance costs for both current employees and retirees’ totals over $17 million annually, our second largest categorical expense. The most current information received from the New York State Department of Civil Service indicates that health insurance rates are projected to increase by 8%. Although the City has little control over these rates, they necessitate almost a $1.0 million increase in General Fund expenditures in FY 2017.

Largely due to the performance of our economic-driven revenues and one-time receipts, total revenues for FY 2016 are expected to exceed our original budget estimate by about $2.9 million. Coupled with conservative budgetary practices and controls, it is estimated that the unassigned fund balance will remain intact at about $13.7 million as of the end of FY 2016. The FY 2017 Proposed Budget utilizes $2.6 million of this amount to balance the budget, leaving an unassigned fund balance of $11.1 million as of December 31, 2017.

The projected ending fund balance for FY 2017 is within an acceptable range to withstand future financial emergencies given the stability and predictability of revenues, Appropriating fund balance in FY 2017 has allowed the City to lower the proposed tax levy without reducing the fund balance to a critical level.

The City has three enterprises: Parking, Railroad and Marina. As municipal businesses, these operations should be self-supporting and could provide the General Fund with a source of revenue if surpluses are generated.

The Parking Enterprise Fund accounts for all revenues and expenses for city-owned parking facilities and on-street parking meters (except for the New Rochelle Transit Center. In FY 2016, ADA improvements was completed at the New Roc Parking Garage to ensure compliance with federal regulations. In addition, implementation of citation payment at pay stations and the roll-out of pay by cell technology was completed. In FY 2017, the on-street muni parking meter roll-out will be completed as part of the City’s comprehensive capital plan.

The Railroad Fund accounts for the operations of the New Rochelle Transit Center as well as the railroad station itself. The Fund’s financial position has improved over the past five years as permit fees and other revenues were adjusted to be more commensurate with expenses. Structural improvements will be completed in FY 2017.

The Marina Enterprise Fund accounts for the operations of the City’s municipal marina. The proposed expenditure and revenue budget for FY 2017 provides for a minimal operating surplus.

“The FY 2017 proposed budget provides for an increase in current levels of service and a critical investment in a ten-year capital improvement program to support anticipated development,” said Strome. “A healthy fund balance and a tax increase is required to meet the City’s long-term operational and capital needs.”